A Company That Uses the Perpetual Inventory System Purchased an Order

question 144

Multiple Choice

A company that uses the perpetual inventory system purchased an order of 500 pallets of industrial soap for $8,000 and paid $750 for the freight-in.The company sold the whole lot to a supermarket chain for $10,000 on account.The company uses the specific-identification method of inventory costing.Which of the following entries correctly records the Cost of goods sold?

• A) \[\begin{array} { | l | r | r | }
• \hline \text { Cost of goods sold } & 8,750 & \\
• \hline \text { Inventory } & & 8,750 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Inventory } & 8,750 & \\
• \hline \text { Cost of goods sold } & & 8,750 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Cost of goods sold } & 8,000 & \\
• \hline \text { Sales revenue } & & 8,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Cost of goods sold } & 8,000 & \\
• \hline \text { Inventory } & & 8,000 \\
• \hline
• \end{array}\]

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